How to Make Money Off Your Friends

Companies will offer big savings to customers willing to be pitchmen on Facebook and Twitter

By Kelli B. Grant | SmartMoney – Thu, May 10, 2012 4:21 PM EDT

Customers seeking the best deals may have to pester their friends.

Some of the latest coupons from retailers and other businesses can only be activated by sharing them with Facebook friends or Twitter followers. And the deals grow even more valuable when customers convince members of their network to buy in, too. Think of it as a new twist on the old-school referral discounts that businesses offer clients for bringing in new customers, says Deborah Mitchell, a clinical associate professor of marketing at Ohio State University.

For example, just clicking on a Facebook link is enough to get customers $15 off a summer rental at Hertz. But for those who can convince one friend to link to the coupon by May 16, the discount jumps to $25; at seven friends sharing, it maxes out at $40 off. Many are willing to spam their friends with such offers in order to get the instant discount. Wrigley and CVS will triple the value of a Life Savers coupon to $1.50 when someone posts a link to the offer on Facebook or emails it to three friends.

Sharable deals let companies leverage social networks to reach more target customers with less marketing effort and cost than other ad or coupon campaigns. "I might tell five people in the real world that I love the salon I go to, but on Facebook I have 500 friends," Mitchell says. "The scale is much bigger." The discount and the sometimes-challenging pursuit of getting a bigger one can be enough incentive to turn shoppers into marketers. "The game elements in the deals really compel people to get more involved," says Gene Cornfield, chief marketing officer for Share It Up!, the marketing firm that developed the Hertz offer. At the firm's sister site PeopleDeals.com, it takes just two shares to pump up an offer from Natural Medicine Center in Garfield, N.J., from 25% off a massage to 50% off.

Consumers typically talk up sharable deals to those friends they think are most likely to want in, and on networks where they're likely to get a response, says Vijay Sundaram, chief marketing officer at marketing firm Social Twist, which developed the Wrigley offer. He says parents were fast to pick up another of the firm's recent offers, a Huggies and Wal-Mart coupon that tripled to $3 when shared.

That could mean you see a lot of relevant deals on your feed, assuming your friends have similar interests, says Jeff Green, an independent retail analyst. LivingSocial encourages users to post links on social media deals they bought, promising the purchased item free if three people click through and buy it, too. Groupon offers $10 credit if the person linking through is making their first purchase from the site.

Of course, some discounts are harder to claim than others. It's easy for people in your network to miss one tweet or Facebook post, unless they're actively tracking social media throughout the day, Green says. Many offers also count on those friends doing more than just clicking -- sharing a deal on their own accounts, for example, or making a purchase. For example, travelers who talk up their stay at Las Vegas casinos can now earn 250 loyalty points when a social media post entices someone to click and book a trip. At 2,500 points, you might get a $25 food comp at Serendipity 3 in Caesars Palace, while 16,500 yields two free tickets to "Penn & Teller" at Rio. The purchase aspect makes the discount more of an aspiration than a given, he says. And of course, consumers posting repeatedly in their pursuit of deals risk annoying their friends to the point where they might be un-friended or blocked.

Users should also be aware that by repeatedly sharing deals that entice friends to click, they may be allowing companies access to information about themselves and their network, Mitchell says. "This is a big grey area right now," she says. Marketers say consumers' information is protected. "It's about growing a platform and a business in the long term," says Cornfield.

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